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Here’s how the collapse of Sam Bankman-Fried’s FTX empire stacks up against other corporate failures like Lehman Brothers and Enron

Sam Bankman-FriedThe collapse of Sam Bankman-Fried’s FTX empire wiped out $32 billion in enterprise value, according to Deutsche Bank data.

Photo by Michael M. Santiago/Getty Images)

  • FTX’s implosion in November was one of the largest corporate failures in history.
  • The crypto exchange’s descent into bankruptcy wiped out $32 billion in enterprise value.
  • Here’s how FTX stacks up against other spectacular collapses – including Lehman Brothers and Enron.

FTX’s collapse last year wiped out tens of billions of dollars in enterprise value overnight.

In November, the crypto exchange filed for bankruptcy after questions about its links with sister trading firm Alameda Research fueled a selloff in its native FTT token, sparking a solvency crisis.

Only 10 months earlier, FTX had closed a $400 million funding round at a $32 billion valuation – and was rumored to be mulling listing on the stock market through an IPO.

Here’s how its fall compares to some of the biggest corporate collapses in history:

FTX’s dramatic implosion wiped out more value than Bear Stearns, Lehman Brothers or Washington Mutual – three high-profile institutions that folded up during the 2008 financial crisis.

But it’s still dwarfed by AIG – the insurance corporation bailed out by the US government after it collapsed during the Great Recession – as well as Enron and WorldCom, two high-profile stocks that crashed in the early 2000s after their financial departments were caught committing accounting fraud.

FTX’s own balance sheet emerged as part of its bankruptcy filing – and provided evidence that CEO Sam Bankman-Fried and three other senior executives knew that around $8 billion in customers’ money had been used to prop up Alameda.

In December, Bankman-Fried was arrested in the Bahamas and extradited to the US, where he has been charged with eight counts of fraud, money laundering, and violating campaign finance laws.

In 2022, the Federal Reserve’s interest-rate increases totalling more than 400 basis points sparked a stocks selloff, roiled bond markets, and triggered a crypto crash that saw bitcoin plunge by more than 60% to under $17,000.

So far, FTX remains the only billion-dollar company to have collapsed amid the market carnage.

“2022 clearly saw many accidents,” Deutsche Bank managing director Jim Reid said in a recent research note. “You saw once in a generation moves in equities, the worst year for US bonds in 236 years, a gilt market under siege for a brief period, and numerous things we hadn’t seen for decades or through any financial history.”

“We also saw one of the largest corporate collapses in history with FTX,” he added. “Although this has been charged as fraud, you can argue that a Fed hiking cycle exposed it as it reversed the enthusiasm for crypto which ultimately exposed the corporate wrongdoings at the company.”

Read more: FTX bankruptcy documents show list of investors set to be completely wiped out, including Tom Brady and Robert Kraft

Read the original article on Business Insider